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$A nears 94 US cents on good local data

Jason Cadden

The Australian dollar has hit a four-and-a-half month high, helped by some encouraging local economic data.

At 1700 AEST on Wednesday, the local unit was trading at 93.62 US cents, up from 93.17 cents on Tuesday.

During the local session it peaked at 93.88 US cents, its highest level since November 20.

Official housing finance figures out on Wednesday showed a 2.3 per cent rise in the number of home loans approved, while the Westpac consumer sentiment index showed a small improvement.

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FXCM market analyst David de Ferranti said the Australian dollar has been able to extend its recent rally against a weak US dollar.

"The Australian dollar's climb towards US 94 cents has likely been bolstered by today's better-than-anticipated domestic home loans data alongside a slight improvement in the Westpac Consumer Confidence reading," he said.

"The figures are further evidence that the record low cash rate is having an effect on the Australian economy, which suggests the Reserve Bank of Australia will not look to cut interest rates further, which is supportive for the Aussie."

Mr de Ferranti said Thursday's official jobs figures for March will be a key focus for markets.

The number of people with jobs is expected to fall by 5,000 in March, an AAP survey shows, after a surprise rise of 47,300 in February.

The unemployment rate is forecast to rise to 6.1 per cent, from 6.0 per cent in January and February.

"An upside surprise to tomorrow's employment figures could help the currency strengthen further, with traders likely eyeing the psychologically-significant 94 US cents mark as the next key technical level for the pair," Mr de Ferranti said.

At 1700 AEST, the Australian dollar was at 95.60 Japanese yen, down from Tuesday's close of 95.81 yen, and at 67.90 euro cents, up from 67.79 euro cents.

Meanwhile Australian bond futures prices were slightly higher.

UBS interest rate strategist Matthew Johnson said there was a small rally during the overnight session but there was very little movement in prices during Wednesday's local session.

"The rally appeared to be on the IMF's (International Monetary Fund) world economic outlook, warning not to prematurely withdraw stimulus.

"The story of today's session has been a gentle unwind of that position, but it's been pretty marginal."

An IMF report released overnight said the winding back of economic stimulus by various central bank around the world is a drag on global economic growth and is hurting emerging-market economies like Brazil, South Africa and Turkey.

At 1630 AEST on Wednesday, the June 2014 10-year bond futures contract was trading at 95.925 (implying a yield of 4.075 per cent), up from 95.905 (4.095 per cent) on Tuesday.

The June 2014 three-year bond futures contract was at 96.970 (3.030 per cent), up from 96.950 (3.050 per cent).